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While the cancellation of gas-fired power plants in Oakville and Mississauga grab headlines, a much older gas plant labours in obscurity in eastern Ontario.

At least, it labours from time to time.

The Lennox Generating Station near Napanee, Ont., has operated at about 1.5 per cent of its capacity over the past five years, according to records from the Independent Electricity System Operator.

But the plant still gets a regular paycheque, totaling more than $7 million a month, from the Ontario Power Authority.

Jan Carr, former chief executive of the Ontario Power Authority, says the 40-year-old plant was the victim of changing circumstances:

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“It’s really the wrong plant in the wrong location,” he said in an interview. “Always has been.”

Ontario Power Generation, which owns and operates the plant, says it provides valuable insurance for Ontario’s power system, despite its modest output.

“The fire department doesn’t come to your house very often,” said spokesman Neal Kelly. “But when your house is on fire, you’re pretty damn happy when it shows up.”

Although it produced only for short periods, and often at low levels, Kelly said it ran on 174 days last year.

While Lennox spends most of its time idling, it’s soon to get a next-door neighbour: TransCanada Corp.’s 900-megawatt, gas-fired plant, which is being relocated from Oakville.

But Lennox will keep going. OPG has signed a contract with the power authority this year to keep it running through 2022, allowing OPG to recover its costs and earn a “reasonable return.”

The plant, which employs 160 people, gets $7.1 million a month — or $3,400 for each megawatt of capacity — under a contract with the power authority, whether it operates or not. Ultimately, the money comes from the pockets of electricity customers.

Most of the gas-fueled generators in Ontario get similar payments, to recognize the fact that they are costly to build, but may operate infrequently. Why build them at all? Because on very hot and very cold days, electricity demand can soar in Ontario, and something has to be there to fill the need.

Critics both inside and outside the power system often argue it would be cheaper to curb demand on those infrequent peak days than to supply it with expensive, infrequently used plants.

The payments to Lennox in fact are lower than those for the new TransCanada plant next door, which will get a minimum of $15,200 a month for each megawatt, regardless of output.

But the TransCanada plant, once built, will be much busier. It is expected to run at about 34 per cent capacity, supplying power during periods of intermediate or high demand, while Lennox is held in reserve.

Lennox is the product of an earlier era, says Carr, who formerly headed the power authority.

“The reality is, that plant is a good example of what can go wrong with long-range planning,” Carr said in an interview.

In Lennox’s case, it was planned more than 40 years ago as an oil-burning generator. Unluckily, it came into service just in time for the oil embargo of 1973 to quadruple oil prices, making the plant instantly uneconomic.

“This is the hazard of building these long-lifetime assets in a world where things change relatively quickly,” said Carr.

Lennox was later adapted to burn either oil or natural gas – it still does burn oil on occasion – but its output was always expensive.

Factoring in the regular payments based on its capacity, it has received about 26.5 cents a kilowatt hour for its electricity over the past five years. That’s close to triple what most gas-fired plants get for their output, and more than double the price paid for power from wind turbines.

It can’t readily be shut down, however, Carr said, because the electricity transmission system was designed around it. Carr likens it to a pumping station on a pipeline. The plant is on a main transmission line, which needs to be supported at key points.

Its virtue now, said Carr, is in the fact that it is already there.

Its role in supporting the power system still has to be met, and replacing it with a new plant would be even more expensive than leaving it in place.

Kristin Jenkins, vice president of the OPA, agrees. “Lennox was built 30 years ago, it’s fully depreciated, so the costs of the plant are much lower than a newer gas-fired plant,” she said.

“Lennox is part of the fleet because it provides reserve capacity,” she said. “There’s a certain amount of capacity that has to be on standby just in case.”

“It’s not as efficient as the other plants . . . But if there is an unforeseen outage, it is there as the back-up that can be relied on.”

Its value will strengthen in the next few years, she said, because the coal-fired plants are due to shut down by the end of 2014, while the Darlington nuclear station will scale back production starting in 2016 for an extensive mid-life refit.

Kelly of OPG said that though the plant’s output is low, it was called on to feed power into the grid 174 times last year.

One of its virtues is its ability to throttle back its output to a very low level, then speed up quickly to balance the natural ebbs and flows of demand on the system.

“What that gives you is tons of flexibility,” he said, and gas-fired plants now being constructed don’t have that capability.

“The plant is there for insurance. It’s there when you need it. It’s there for flexibility, and it provides very good value,” he said.

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